8 Steps the Department of Justice Could Take to Reform Farming

On Friday in an unprecedented move with the USDA, the Department of Justice launched an investigation into the farm business. The investigation began a 7-state probe into how Monsanto treats its customers, our nation’s farmers.

I recently had the honor of presenting for our nation’s top producing farmers in Chicago at the Top Producer Seminar, sponsored by Cargill and Pioneer. I was scheduled to present with Monsanto’s VP of Sustainable Yield, but a few days before the presentation was told that he had moved to China and that there was no one to take his place. I then had the privilege of spending the afternoon in an incredibly insightful discussion with the farmers, many of whom are Monsanto’s customers, who are remarkable fathers, grandfathers, and businessmen.

As I walked into the room for that presentation, I was greeted with “Welcome to the Lions’ Den.” As I found the courage to take the stage, I shared that according to the USDA, farm income was down 35% in 2009. I then shared that Monsanto is reporting, in forward looking statements to Wall Street analysts based on projected sales that they have asked for from the farmers, that Monsanto is expecting gross margins in Q2 2010 of 62% and that they are expecting to drive up the price mix of their products, corn and soy, by 8-10%. I also shared that according to these forward looking statements, Monsanto expects to expand their glyphosate revenue to an estimated $1 billion in gross profit by 2012, further enabling Monsanto to drive R&D into seeds and to price those seeds at a premium – further driving price increases on the farm.

And then I listened.

What I learned from these remarkable men and women is simply jaw dropping.

Due to Monsanto’s contracts with seed companies, farmers are now bound by the threat of a lawsuit if they speak out regarding farm practices. As third and fourth generation farmers, inheriting their grandfathers’ lands, their corn crops are no longer regulated by the FDA but by the EPA due to the insecticidal proteins they now contain, and they are subject to rising, unregulated costs never before seen in farming – contractual fees, trait fees, licensing fees and royalty fees and germ plasm fees associated with a technology that has been engineered into seeds designed to enhance Monsanto’s bottom line.

As I listened to the farmers and learned about their trade practices, I could not help but think of AT&T and the Bell System which for years functioned as a regulated monopoly until an antitrust investigation resulted in its break-up, as the practices employed by Monsanto on the farm, rival the fee structure that the phone company once had in place.

As our dialogue grew, we learned that together, we could affect remarkable change.

So in collaboration with our nation’s leading farmers to address the patents, licenses and royalties fees now being engineered into our food supply designed to enhance the profitability of the world’s largest agrichemical corporation , here are 8 steps that the USDA and the Department of Justice could take to address the financial impact that these practices are having on the farm:

As was done with AT&T, re-establish Monsanto and its subsidiaries into separate companies; separating the germ plasm and technology divisions into independent entities

Establish precedence that these newly established entities do not collect trait fees, royalty fees, licensing fees or other forms of income from each other, then they should not be allowed to collect these tech fees from the independent companies

Have Monsanto refund the money collected from the independent seed companies as retribution for the fact that the same fees were not charged to their partners and subsidiaries.

Require that all companies (Monsanto, DuPont, Syngenta etc.) supply genetically treated and untreated seeds and technology to the public in order to give the farmers a free market from which to choose how much the farmer wants to spend on a bag of corn or beans given that the current practice involves the blending of the best genetics into melting stock corns, so the companies can harvest more profit.

Establish an oversight committee with one term limits made up of independent seed companies and with multi nationals in an effort to prevent monopolistic price increases in the cost of corn and soy production that will impact food price inflation at the retail level.

Structure federal subsidies so that taxpayer dollars are used to subsidize and provide marketing and insurance programs for the growth of commodities (corn and soybean crops) that are grown without the use of synthetically engineered chemical ingredients

Reduce the fees charged to farmers growing crops without synthetic, chemical and genetically engineered ingredients that they must pay in order to certify that their crops are free of these ingredients (fees are paid to certifiers, not to the USDA National Organic Program).

Provide the same level of marketing assistance and crop insurance programs to farmers growing crops free of synthetic and chemical ingredients.

In a world in which food security is as much of an issue as nutrition, the establishment of a level playing field on the farm is vital to the health of our food system. And while the lack of federal oversight and regulation of trade practices on the farm has enhanced Monsanto’s profitability drivng shareholder value, its costs are being externalized not only onto our nation’s farmers but also onto the 300 million American eaters.

We are all stakeholders in our food supply and together, we can affect remarkable change for farmers, families and food.

Thanks for the wonderful insights. Assuming that the eight steps you've laid out would constitute your "wish list," I'm curious how realistic you think each step could actually be.

Which of these steps could we have some realistic hope of seeing under the current DoJ/USDA? And for the rest, what forces are at play in preventing them? Congressional offices with agribusiness ties? Policy makers at USDA? If we can't hope for action under the most progressive administration in decades, then what does future look like for America's farmers?